Puncak Semangat drops Jaring bid, pushes ahead with 4G rollout

KUALA LUMPUR, Sept 4 — Telecom firm Puncak Semangat Sdn Bhd has ditched plans to acquire Jaring Communications Sdn Bhd but has raided the government broadband company for top executives including chief executive Nik Abdul Aziz Nik Yaacob ahead of launching its 4G or Long Term Evolution (LTE) service next year, sources said.

The Malaysian Insider understands Puncak Semangat, which is linked to logistics tycoon Tan Sri Syed Mokhtar Al-Bukhary, dropped its bid after a due diligence of the country’s first Internet service provider. The Finance Ministry was said to have put a RM50 million price for the company, which relies mainly on government contracts.

“Puncak Semangat is not interested in Jaring anymore. In fact, they have tapped Jaring CEO Nik Abdul Aziz Nik Yaacob to join them,” a source told The Malaysian Insider.

An industry source confirmed Nik Abdul Aziz’s departure from Jaring effective October, saying that several other Jaring executives are expected to join the exodus. Nik Abdul Aziz joined Jaring in March 2011, replacing long-serving chief executive Dr Mohamed Awang Lah.

The 43-year-old was a senior director in charge of Strategic Information Systems, and an exco member of the Malaysian Communications and Multimedia Commission (MCMC) from 2008 to 2010. Before that, he headed major IT formulation and development project as a senior vice-president with Khazanah Nasional Bhd from 2005 until 2008.

“Puncak Semangat decided Jaring was not worth acquiring but had some top executives who could work well in its LTE venture,” the industry source said.

Puncak Semangat is expected to start its LTE/4G operations in November but only roll out its services by the middle of 2013. The company received 30MHz of the 2.6Mhz spectrum under the government allocation for the next-generation Internet service, the biggest chunk among the nine companies licensed for LTE/4G. The other companies only received 20Mhz each.

It was among four companies interested in taking over Jaring. Three other bids are expected to have been submitted by CMC Engineering Sdn Bhd Asian Broadcasting Network Sdn Bhd and Optinet Technology Sdn Bhd.

Talk of Jaring being on sale had begun in 2001 when Telekom Malaysia Bhd (TM) first expressed an interest in buying the broadband company. But the deal fell through although a budget proposal years later indicated that Jaring would merge with TM but that too didn’t materialise. A few years later, Time dotCom Bhd had sought to acquire Jaring but its low offer price didn’t interest Putrajaya.

The Finance Ministry called a tender exercise in 2007/2008 using an advisory firm to handle the bids. Time dotCom was again one of the bidders, along with four other parties, including Packet One Networks Sdn Bhd. But no deal was struck.

The Edge reported last month that Puncak Semangat had made overtures to Tenaga Nasional Bhd (TNB) for its 49 per cent stake in wholesale broadband service provider Fibrecomm Network (M) Sdn Bhd.

“Puncak Semangat is said to have already made the offer to Tenaga to buy the stake,” said an industry executive. However, the exact pricing of the stake is not known at this point in time, the business weekly said. The remaining 51 per cent in Fibrecomm is owned by Telekom Malaysia Bhd (TM), the dominant broadband service provider in the country.